Facility Management Market, Japan and South Korea, 2025-2030

Transforming FM Through User-centric Experiences and Workplace Innovation

The mature Japanese and South Korean facility management (FM) markets are experiencing relatively stable growth post the 2020 disruption, as economic conditions are stable and growth is consistent. The effect of inflation calmed in 2023, and service providers are experiencing stability in terms of margins costs. The markets are motivated by the adoption of technology, regulatory stringency, and user demand for strategic value. Outsourcing in both countries is driven by aging infrastructure and sustainability objectives. FM providers with an integrated approach, compliance in mind, and the ability to offer innovative solutions are seen as key preferred partners.

Compared to other Asia-Pacific countries, Japan and South Korea have low outsourcing rates because of the dominance of conglomerate FM arms, fragmentation of service-line outsourcing, and extreme shortages of talent-obstacles to larger scale market development. Despite these obstacles, the regional market remains attractive to global and domestic FM providers. The large untapped FM universe, which equates to first-time outsourcing opportunities, coupled with existing high acceptance of technology-enabled value propositions among end users, create growth potential for service providers. The well-regulated standards and guidelines related to buildings and maintenance translates to market opportunities too.

This study analyzes the Japanese and South Korean FM markets, covering market drivers, restraints, forecasts, trends, and the competitive landscape of the overall market. It covers the 2022 to 2030 time frame, with 2024 being the base year.

Scope of Analysis

Geographic Coverage

Japan and South Korea

Study Period

2022-2030

Base Year

2024

Forecast Period

2025-2030

Monetary Unit

US Dollars

2024 Conversion:

1 Japanese Yen (JPY) = 0.00661 USD

1 Korean Won (KRW) = 0.000734 USD

• This study uses end-user contracts to calculate the facility management (FM) market's revenue, including the outsourced FM market (excluding in-house FM services and small FM). The study refers to outsourced FM as the FM market.
• The study will present in-house FM market opportunities to quantify the FM universe (total spending on all FM services and the addressable market).
• In-house FM covers the value of services the end user delivers using its internal staff, not an external service provider.

The Impact of the Top 3 Strategic Imperatives on the Facility Management Industry

Internal Challenges

• Why
  • The reluctance to change by many local service providers is due to end-user preference skewed towards single or bundled services, despite the overall high acceptance of technologies across both countries.
  • This conservative nature results in service commoditization, intensifying price competition, and hindered development of an integrated approach towards FM solutions.
• Frost Perspective
  • Although the end-user mentality is gradually evolving, service providers must keep pace by gearing up their in-house capabilities and teams.
  • Changing requirements of contemporary work environments demand more innovative and flexible integrated solutions. To meet future skill needs and to develop new capabilities focused on growth, providers must pursue partnerships, collaborations, and M&As.

Transformative Megatrends

• Why
  • Labor force and workplace transformation affects FM customer bases, value propositions, and service requirements. This evolution requires technology and service innovation, new value propositions, and improved business models.
  • The COVID-19 pandemic changed the future of work and boosted digital technology solutions and new business models. The highly mobile and flexible workforce needs to be supported in complex and diverse environments, with user experience and sustainability at the center.
• Frost Perspective
  • The shift toward a more digital and flexible workplace is undeniable. Domestic service providers must gain better insight into the transformational journeys of FM clients.
  • The future of FM depends on how industry players adapt to digitalization and providing solutions that can satisfy the changing needs of their clients. In the new reality, companies must develop value propositions and solutions that are aligned to their customers' evolving needs, sustainability, and business focused goals.

Competitive Intensity

• Why
  • Government policies and corporate social responsibility programs have led to a major change in Japan towards sustainable building practices, especially smart and energy-efficient designs.
  • This is changing the competitive environment with major players scrambling to be prepared with the appropriate tools and competencies.
• Frost Perspective
  • The trend towards smart buildings creates demand for high-tech FM services, with the emphasis on sustainability. Service providers should have the knowledge and equipment to apply energy-efficient measures and assist clients in achieving regulatory compliance. This demands a profound knowledge of building systems and a desire to keep up with the latest technological changes.
  • Service providers that fail to keep up with these changing demands are at risk of losing market share and growth opportunities within the market.

Growth Restraints

• The Japanese and South Korean FM market is dominated by large conglomerates (keiretsu and chaebols, respectively) that frequently have internal FM arms. These organizations offer services to businesses affiliated with the groups, which are classified as in-house, distorting market statistics and lowering the apparent outsourcing levels. This model does not provide much opportunity to independent FM providers to enter large-scale contracts because business remains within corporate ecosystems. Consequently, the competitive forces are usually limited. Preference for group-aligned service structures inhibits growth of third-party FM providers.
• Although value-added services are appreciated, the FM market still has a high preference for outsourcing by service line (for example, cleaning, security, maintenance) instead of using an integrated approach. Most organizations are still wary of bundling services with one provider because of issues around control, transparency, and cost clarity. This disintegrated culture of outsourcing restricts the magnitude, effectiveness, and innovativeness that integrated solutions can offer. Such restraint limits market development and reduces the potential of strategic partnerships.
• Despite the robust regulatory systems in Japan and South Korea, there are not any universally accepted standards or protocols for FM. This brings about discrepancies in service level and performance benchmarking among clients and sectors. The absence of common standards makes it difficult to scale best practices and automate compliance. The lack of standardization also hinders the industry's digital transformation as tools and platforms cannot support the fragmented needs. In general, the lack of unified operational standards restricts optimization of services and market maturity.
• Resource deficit continues to be an issue across both the Japan and South Korea markets. Experienced staff, particularly in technical maintenance or more sophisticated services, is scarce because of aging demographics and the lack of interest among younger employees in operational positions. FM is not always considered a strategic career path but more of a support role, resulting in fewer educational programs and professional certification pipelines. The shortage of qualified FM professionals is a major challenge in terms of growth and quality assurance.

Growth Drivers

• Japan and South Korea are technologically advanced, which drives the need to adopt smart FM solutions such as IoT-based maintenance, AI-based analytics, and digital twins. Good infrastructure and an innovation-friendly culture enables FM providers to offer tech-enabled systems that improve building performance and operational efficiency. The supportive FM environment leads to an innovation-based competitive landscape.
• Both countries are seeing a rise in demand among end users seeking strategic value rather than mere maintenance. Services such as energy audits, workspace reconfigurations, and wellness programs are highly desired. Corporate clients are interested in life cycle cost management, sustainability, and user experience, which pushes FM providers to offer integrated, consultative-based solutions aligned to wider business objectives.
• Japan and South Korea have stringent building codes and sustainability requirements, compelling FM providers to be in full compliance. Fire safety, labor laws, seismic codes, and green building standards are some of the areas in which FM firms need to be nimble and informed. Clients would rather outsource to experts that are able to work around regulations, reduce risk, and fulfill the requirements of mandatory reporting and performance.
• A large percentage of the buildings in Japan and South Korea are aging and need continuous maintenance, system upgrades, or retrofits. The challenges of managing aging infrastructure are also a constant source of demand for FM skills in life cycle planning, diagnostics, and phased improvements. These asset-intensive markets particularly appreciate FM providers that can deliver engineering expertise and modernization plans.
• End users in both countries perceive outsourcing FM as a means of cutting down operational costs and streamlining resources while tapping into specialized expertise. Labor costs and talent scarcity promote outsourcing. Performance-based contracts and integrated FM solutions are attractive to firms that want efficiency, scalability, and long-term savings in the form of professionalized services.
• FM requirements are being redefined by sustainability and workplace change. Regulatory support through zero-energy building (ZEB) standards and increasing demand for flexible or tech-enabled spaces require value-added solutions. FM providers will be required to assist in green programs, digital work tools, and occupant experience improvements. This change makes FM a strategic ally in the pursuit of environmental objectives and workplace innovation.

Competitive Environment

Number of Competitors

About 80 to 120 major FM service providers; approximately 300 to 400 when including small, single-service providers

Competitive Factors

Local relationships, past project references and performance, technology focus, value-add services, customer support, regulatory compliance, end-user sector focus

End-User Industry Verticals

Top-2 end users: industry and other private (referring to retail, hospitality, and sports and leisure facilities)

End users with fastest CAGR (2024-2030): education, industry, professional services, and financial services

Leading Competitors

AEON Delight Co., Ltd., Nippon Kanzai Co. Ltd., Tokyu Community Corp, NTT Facilities, INC., Taisei Co Ltd., S-1 Corporation, S&I Corp

Other Notable Competitors

CBRE, JLL, Savills, NEC Facilities Ltd., Globeship Sodexo Corporate Services K.K., Kanden Facilities Co Ltd., Cushman & Wakefield, Asahi Facilities Inc., Tokyo Biso Kogyo Corporation, NIHON MECCS Co., Ltd., Sohog Security Services Co., Ltd., Hines Korea Advisors Co., Ltd., Hyundai GBFMS Co., Ltd., HDC LABS Co., Ltd., SL Platform Co., Ltd., SEANTECS Ltd.

Distribution Structure

Due to the unique market environment involving FM arms of conglomerates, most service providers have a large workforce to self-deliver solutions. Foreign service providers partner with local service providers for basic soft and hard services such as cleaning, security, and M&E services. These foreign service providers have a wealth of project management skills and expertise

Competitive Environment

Date

News

March 2023

CBRE K.K announced partnership in Japan with INSPACE-an Australian PropTech company. The partnership enhances CBRE's PropTech Solutions for improved client experience and provides creative solutions to support faster and more informed client decisions.

February 2024

S&I Corp., an FM provider from South Korea, is working with California-based Scenera to replicate FM platform model of S&I Corp in the United States.

September 2024

Japan's Sohgo Security Services Co., Ltd. acquired Kanso Co., Ltd. to further expand its FM services, particularly in the Kansai region.

November 2024

Tokyu Land announced the buyout of Renewable Japan to expand its renewable generation business and venture into the O&M service business.

February 2025

AEON Co. announced the acquisition of AEON Delight Co., Ltd., to strengthen AEON's control and streamline operations within the group.

March 2025

KKR & Co. Inc., a US private equity firm, and Japanese state-backed Japan Investment Corp (JIC) jointly acquired Topcon. While Topcon is not directly involved in the provision of FM, some of its solutions are related to the FM software ecosystem, particularly in construction and infrastructure projects.

May 2025

Hanwha Group from South Korea returns to the food services industry with the acquisition of the country's number 2 food service and catering company, Ourhome Ltd.

July 2025

Mitsui Fudosan set to acquire Toyota Automall Development Corporation (TAC). Concurrently, it will acquire the retail facilities of TAC in a joint acquisition with Toyota Fudosan Co., Ltd., adding to its retail FM portfolio.